Derivative Assets Analysis

Derivative assets analysis enjoys an unusual status; it is a recently developed, relatively complex tool of economic analysis, faithful to the core of economic theory, and widely used to make real-life decisions. This paper, discusses derivative assets based on buy-and-hold strategies; derivative assets based on dynamic replicating strategies; valuing and replicating other derivative assets; and the Black-Scholes option pricing formula. Then it takes a detailed look at four applications: index futures, equity options, index options, and portfolio insurance.